Moving trading from B.C. (before computers) to PCs

One day around February 1983 Mendelsohn submitted an article to Commodities magazine (later that year renamed Futures) addressing the unique intersection of computing technologies and technical analysis. The magazine had published a number of articles about technical analysis previously but mostly about visible chart patterns and trading techniques and not how individual traders might use a personal computer to develop, test and optimize trading strategies.

It was clear by then that the personal computer had the potential to change the face of financial market analysis and trading. Mendelsohn’s article demonstrated that he knew and understood the subtleties and nuances of commodities trading, which are unique and difficult for many traders to grasp, much less write about and program into computer software.

His first article appeared in the May 1983 issue, followed by two subsequent articles later that year in which he used ProfitTaker as the basis for introducing the concept of strategy back-testing to commodities traders interested in applying personal computers to their trading for the very first time.

Even given the relatively limited computing power of PCs in 1983 compared to what they can do today, Mendelsohn’s first history tester had the ability to link actual contracts and test trading strategies under simulated, yet real-time, conditions; optimize various technical indicators and execution times; handle rollovers of expiring contacts; test for lock-limit conditions; and display trade performance results in various formats and levels of detail.

It was apparent to anyone who saw Mendelsohn’s software or heard him speak at various financial conferences in the 1980s that he was an expert at applying personal computing to the markets and that technical analysis was in the early stage of a technological revolution.

Other commodities traders followed in Mendelsohn’s footsteps (including several of his own customers) and became trading software developers, which opened the way for today’s huge technical analysis and trading software industry. Years after the first release of ProfitTaker, Omega Research, founded in 1982, introduced its back-testing software with System Writer in 1989 followed by TradeStation in 1991.

About the Author

Darrell Jobman has been writing about financial markets for more than 35 years, covering all aspects of the trading industry. A decorated Vietnam War veteran, he was a newspaper farm editor and editor of several agricultural publications before becoming an editor of Futures Magazine for more than 15 years. He has written and/or edited more than a dozen books on trading including The Handbook for Technical Analysis. His passion is helping others succeed by learning the "dos and don'ts" of trading and through his editorial contributions to TraderPlanet.com he has really been able to satisfy his passion.